How much crap do you have on hire purchase?
- Thread starter katy81
- Start date
Exactly this. Maximise all 0% offers, credit cards and HP. Then stash the cash of equivalent value in instant access ISAs. (Or fixed term if it expires before the 0% runs out). Then setup reminders to pay them before charges levied against the debt. Close the accounts and CC’s when paid off. Apply for new credit 3months later.
Caporegime
Prior to the pandemic, the 0% tactic in order to keep money in savings account was practically useless due to the stupid low interest rates. At near 0%, you are hardly going to make enough to get even a Pizza unless you have hundreds of thousands in savings. Yes, every little helps but for the piece of mind, I just pay it off.
These days when you can get 5% then it's different ball game.
These days when you can get 5% then it's different ball game.
Soldato
This works great if you have the funds in the bank to clear off the amount, if/when it's required.
Caporegime
The other reason I don't like to have a lot of HP hanging over me, is when it comes to getting a mortgage or renewal, the lender will ask how many outstanding loans have you got. (Yes I know this moment doesn't happen too often)
I would be too embarrassed to say....oh I have...let me see "My car, my kitchen, my sofa, my computer, my fridge, my washing machine, my matress, my phone, my Playstation...".
I am not sure if that is a look I want to give to a lender, is that a sign of a person good with finance? A person who knows how to balance the books or a person who buy things on credit that he can't afford....I don't know. I don't want to ask that question. I rather have just the monthly credit card balance and the usual stuff like mortgage, car and perhaps a phone contract. That's it.
I would be too embarrassed to say....oh I have...let me see "My car, my kitchen, my sofa, my computer, my fridge, my washing machine, my matress, my phone, my Playstation...".
I am not sure if that is a look I want to give to a lender, is that a sign of a person good with finance? A person who knows how to balance the books or a person who buy things on credit that he can't afford....I don't know. I don't want to ask that question. I rather have just the monthly credit card balance and the usual stuff like mortgage, car and perhaps a phone contract. That's it.
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Associate
i bought a 2K TV on interest free.. buy now pay 6 months later which worked really well for us. not sure if that is classed as HP, but we have also done it on sofas and furniture as well, had no problems paying it back. I wouldnt do it if we had to pay interest on it though.
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OK that's fair to distinguish between loans and HP, but I was replying to a poster specifically mentioning loans. Regardless, my point is mostly around how we define 'affordability', and I don't fully agree that inability to pay for something outright in cash means you can't afford it, even if you are taking out HP.
Like I said, it might not make financial sense, it might make you hard up, but that doesn't necessarily mean you can't afford it depending on definition, and the proof of the pudding is does the item get repaid, or does it get repossessed.
Taking your example, "couldn't afford to get rid of the car as needed it for work", and is now fully paid off, that means in one sense of the word it was affordable.
I don't want to give the impression I think taking out HP is a good idea, but it can still be affordable even if it's a bad idea.
Soldato
Don't be embarrassed, your post reminded me of remortgaging around 2005-6, I'd got about £40k stoozed on credit cards and my bank statements were littered with payments in and out of dozens of bookies as I was doing a lot of matched betting at the time, they didn't care.
Soldato
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- 30 Nov 2011
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I'm not that extreme, I just have a preference for keeping money myself instead of drawing it down to buy a large purchase when 0% is available.
I also wouldn't feel comfortable running up big CC bills even if it was on a 0% deal, I just put everything on CC for the protection and then pay it off every month, I still keep an eye on my CC bill to make sure it isn't exceeding my monthly income.
lol yeah I remember that period. I think I had ~£15k on business expenses across personal cards (yay points) and at least 20k in various other stoozing deals (plus matched betting and about 12 bank accounts to rinse interest rate rises).
Then they give you a paper that says "must pay off all of these debts when mortgage commences". I asked what follow-up I'd need to provide them that this had been done.... she said nothing it is trust based. OK then
Soldato
We did a fairly big extension couple of years ago and put new kitchen, sofa, appliances etc on 0% CCs rather than using our savings. Mine 0% is ending this month so need to pay what's left in next few days. After that I will have nothing and there will be few hundred left on my partner's CC but she's got few more months before her 0% runs out.